Ohio House budget changes would give schools more money but take away savings

View full sizeEric Albrecht l Columbus DispatchLegislators on Thursday make several tweaks to Gov. John Kasich's two-year budget proposal.

COLUMBUS, Ohio — Ohio House Republicans propose pouring an extra $80 million into school districts in the next state budget but would dump a plan that could have saved districts $229 million a year by allowing them to shift more pension costs onto employees.

Those changes, unveiled Thursday evening, were among hundreds of tweaks that GOP lawmakers made to Gov. John Kasich's two-year budget proposal.

The majority-party lawmakers also proposed creating a $100 million fund to encourage local governments to work together, ending Ohio's estate tax in 2013 and increasing funding by $15 million for a program that provides in-home care to seniors. They also threw out some provisions sought by Kasich, including plans to reform prison sentencing and give state officials unlimited authority to privatize parts of state government and his proposed health care pool for public employees.

"It's a tough budget for everybody," said Rep. Ron Amstutz, the Wooster Republican who heads the House finance committee. "Everybody is being stretched as we bring resources in line with spending."

The new proposal bolsters per-pupil basic aid to the more than 600 school districts in Ohio by a total of about $60 million. It also caps any district's losses in basic aid at 20 percent annually -- a loss-stopping mechanism worth about $20 million over the next budget cycle.

But the increase was more than offset by stripping out a provision in Kasich's budget allowing districts to shift pension costs to employees. Currently, public employers pay 14 percent of pension costs and employees pay 10 percent. Kasich's budget proposal would have changed that to 12 percent each.

Highlights of the House proposal

House Republicans unveiled hundreds of tweaks they want to make to Gov. John Kasich's two-year budget proposal, including:

• Giving $80 million more to school districts but wiping out a plan that could have saved them $229 million a year in pension costs.

• Creating a $100 million fund to encourage local governments to share services.

• Eliminating Ohio's estate tax in 2013.

• Increasing a program that provides in-home care for seniors by $15 million.

The GOP plan increased spending by $114.5 million in the first year of the all-funds budget and $68.8 million in the budget's second year, on top of the $112 billion sought by Kasich.

The 20 percent loss cap means that 28 wealthy school districts -- 14 in Northeast Ohio including Beachwood, Rocky River and Solon -- will pick up about $14.5 million over the first year of the budget, according to a Plain Dealer analysis. In year two of the budget, the 20 percent cap would be worth about $5.5 million.

The cap was a variation on a proposal by Rep. Nan Baker, a Westlake Republican, in recent days. It came after Republican lawmakers were battered in suburban school meetings across Northeast Ohio by crowds unhappy with high-percentage losses proposed by the GOP governor.

Amstutz said the pension shift was scrapped because GOP lawmakers didn't think the rapidly moving state budget was the right place for such a high-stakes move.

"The decision is there are a lot of implications to that policy proposal and we need to look at it very carefully and make an assessment on what ends up being appropriate policy," he said.

House Republicans also moved to limit the pain felt by local governments and school districts down the road because of a controversial proposal by Kasich to accelerate the phase-out of the tangible personal property tax.

Under the new plan, a tangible personal property tax freeze would take effect in 2013 so that local governments and school districts wouldn't lose money from the phase-outs beyond the next state budget.

"We are proposing to only let that toll out for the next two fiscal years and then we stop that completely so there is not this shadow over the local governments for years and years to come," Amstutz said.

The $100 million worth of carrots for local governments to collaborate may not mean much to communities staring down 25 percent and 50 percent cuts in the Local Government Fund in the Kasich budget. In Cleveland, Mayor Frank Jackson has already announced that as many as 400 workers would lose their jobs from state aid cuts.

Amstutz made no bones about the whopping cuts that are coming.

"We are in a changed fiscal environment that requires government to deliver services in a different way," he said. "We aren't representing or suggesting the funding in this innovation fund will be commensurate with the losses experienced."

The GOP's plan to get rid of the estate tax starting in 2013 would also lower the boom on local governments. The estate tax, which hits the 7 percent of estates in Ohio valued over $338,333, funnels about $250 million a year to local governments and only $60 million to state coffers. A bill to eliminate the tax is currently in both Republican-controlled chambers of the state legislature, but neither has made it to the floor yet.

Republicans yanked a provision from the budget that would have shuffled more drug offenders and short-timers in the prison system into community control programs in an effort to ease prison overcrowding and cut costs. But the plan is still alive in separate legislation in the General Assembly.

So just how did Republicans pay for the $183 million in changes they made over both years of this budget?

They used rosier revenue projections and lower Medicaid caseloads, and they snatched $65 million more in unclaimed funds and made new cuts to some state agencies.

Rep. Vernon Sykes, an Akron Democrat and the ranking minority member on the finance committee, said the budget was no different from the one proposed by Kasich.

"It's basically the same structure, but they have used more one-time money to help the schools out," Sykes said.

House Minority Leader Armond Budish, a Beachwood Democrat, ripped into the Republican plan as continuing "the trend of increased spending while devastating Ohio's schools and local communities."

"It's clear the Republican agenda for Ohio is to give tax breaks to their friends while balancing its budget on the backs of middle-class families, our oldest and most disabled citizens and our children," Budish said in a prepared statement.

School superintendents in Northeast Ohio took the news in stride.

Rocky River Superintendent Michael Shoaf said the additional per-pupil money and 20 percent loss cap would not prevent cuts in his school district. Shoaf said the district would still lose nearly $1 million a year under the House's budget even with the changes.

"I guess it's better than what it was," Shoaf said. "That being said, it's still a lot of money."

Shoaf said his district would have saved $380,000 a year if workers had to contribute an extra 2 percent of their salary toward their pensions.

Westlake Superintendent Dan Keenan said he is still hopeful lawmakers will further restore state funding to his district. The House's changes to the budget represented progress, he said.

"We'll respect the process and still stay involved and advocate for our kids here," Keenan said. "I'm glad to see there is some consideration."

Kasich spokesman Rob Nichols said the 2 percent shift in pension contributions was designed to help school districts control their costs. "At this point, it's in the hands of the legislature," he said.

Public hearings on the House GOP budget proposal will begin this morning and continue Saturday and Monday at the Statehouse. The plan is to vote the state budget bill out of the finance committee on Tuesday. It would move to the House floor Thursday for a vote by the full 99-member chamber.

Follow Us

cleveland.com is powered by Plain Dealer Publishing Co. and Northeast Ohio Media Group. All rights reserved (About Us).The material on this site may not be reproduced, distributed, transmitted, cached or otherwise used, except with the prior written permission of Northeast Ohio Media Group LLC.